With longevity of life escalating to 75-80 years for typical Indians, more men and women will need to be initiated into pension solutions by revolutionary strategies such as auto enrolment into schemes such as the National Pension System (NPS) at the time of joining an organisation, PFRDA chairman Supratim Bandyopadhyay tells Surya Sarathi Ray & Prasanta Sahu. Excerpts:
The National Pension System is tax-effective and presents larger returns compared to other schemes. But an apparent disincentive, according to a section of possible subscribers, is that it does not permit withdrawal of complete corpus at the time of exit, like EPF.
NPS is a pension scheme. At the finish of the term, if one is not capable to provide pension when he/she desires that, then the objective of the scheme is defeated. A lot of men and women due to hardship through pandemic withdrew funds from EPFO. It is, of course, a help in complicated instances. But the downside is that retirement preparing goes for a toss. Today a particular person at the age of 60 might live for a different 20 years, on an typical.
Can a particular person switch from EPFO to NPS?
EPFO is mandatory exactly where the quantity of workers are more than 20 in an organisation and the salary of workers are significantly less than Rs 15,000/month. A lot of organisations feel EPFO is the only selection. So, they assure that their workers join the EPFO. We have knowledge of a couple of organisations, which had been not covered beneath EPFO. They had close to 1,000 workers. We gave them a presentation and they checked with EPFO. Then, all the 1,000 men and women shifted to NPS. That is probable.
How the NPS is panning out in rural places?
Looking at the achievement of the Regional Rural Banks (intermediaries for NPS), in rural region also, the scheme is performing really nicely. Thanks to banking correspondents, 95% of the organization is generated by the banking channels.
The government used to subsidise 50% of the contribution initially for Atal Pension Yojana (APY). Is there any strategy to bring it back?
The scheme began on June 1, 2015. The subsidy was provided to these who joined till March 31, 2016. The government contributed a maximum of Rs 1,000 in one account in a year and the facility was there for 5 years. But some incentives are nonetheless there. For every single APY subscriber, intermediaries get about Rs 120, and if the particular person does not quit the scheme, there is added incentive.
We have made a proposal for reintroduction of the subsidy scheme to the government. It is for the government to take a contact on it.
Are you in favour of the notion of a universal pension for the beneath poverty line men and women?
APY is also a contributory scheme, but the government provides assure that is in case of a volatile marketplace, if a person’s investment does not develop at the price that was envisaged, then it will assure that she get a minimum pension of Rs 1,000-5,000/month. We have recommended that the APY will need not be isolated, let it not be isolated – can it be combined with two other solutions – Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Suraksha Bima Yojana (PMSBY). The notion is to have a bigger social safety scheme exactly where pension and insurance coverage converge.
Is there any strategy for auto enrolment by establishments into pension schemes?
Auto enrolment was an announcement in the Parliament. Now the PFRDA Act is in the method of finding amended. While discussions are on, final selection is but to be taken by the government.
Will auto enrolment commence with the corporate sector?
For some portion of the corporate sector, it is currently mandatory. For instance, most public sector banks have made it mandatory for their workers joining just after a unique reduce-off date. They will not get the advantage of the old pension scheme.
Are more firms joining as fund managers beneath NPS?
Currently, there are seven fund managers for NPS corpus. Three more are in the method of taking licence — Axis, Max Life Insurance and Tata Mutual Fund.